Apple Dropped From Chinese Buy List for Missing on Pledge

(Corrects to show in fourth paragraph that government departments can continue to purchase some Apple computers.)

Apple Inc. (AAPL) products were left off a Chinese government procurement list distributed last month after the company failed to submit documents that included a pledge not to violate state or public interests, according to government officials familiar with the process.

The Finance Ministry documents also would have required the company to provide detailed product information, said the government officials, who asked not to be identified because they weren’t authorized to speak publicly about the matter. The documents don’t specify the types of information required.

“Relevant documents were not submitted in accordance with provisions and commitments,” the Finance Ministry said last night in a faxed response to questions from Bloomberg News.

A separate procurement list includes some Apple computers that departments can continue to buy on a smaller scale, defined as purchases totaling less than 1.2 million yuan ($195,000), according to a state purchasing website.

Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment.

Apple’s failure to submit the documents raised security concerns about its products, the officials said.

Photographer: ChinaFotoPress via Getty Images

Customers visit the new Hang Lung Plaza Apple store on Aug. 2, 2014 in Wuxi, China. Close

Customers visit the new Hang Lung Plaza Apple store on Aug. 2, 2014 in Wuxi, China.

Close
Open
Photographer: ChinaFotoPress via Getty Images

Customers visit the new Hang Lung Plaza Apple store on Aug. 2, 2014 in Wuxi, China.

The ministry documents don’t define what state or public interests are, the officials said. Government rules say violations could lead to exclusion from future procurement requests and being named an unacceptable provider of products to public agencies.

Final Register

In 2013, a unit of Digital China Holdings Ltd. (861) was prohibited from taking part in government-related procurement for three years after the Ministry of Finance found violations in previous bidding.

Apple’s exclusion from the list of products that can be bought with public money comes after China said in May it would vet technology companies operating in the country for potential national-security breaches. Ten Apple computers -- including the iPad, iPad Mini, MacBook Air and MacBook Pro -- were omitted from the final government register distributed in July, according to officials who read it.

The models were on an earlier draft version of the list from the National Development and Reform Commission and the Finance Ministry, the officials told Bloomberg. The state-run China Government Procurement News said last night that 10 Apple models had been put on the draft list of energy-efficient products approved for government procurement in June.

China Retaliation

The procurement list affects government purchases and doesn’t apply to the consumer market.

China’s government had earlier threatened retaliation for the U.S. indictment of five Chinese military officers on hacking charges. Last month, state-run China Central Television reported that features of Apple’s iPhone software may result in the leak of state secrets. Apple rejected those claims.

Apple depended on Greater China for about 16 percent of its $37.4 billion in revenue last quarter, according to data compiled by Bloomberg. IPad sales in the world’s biggest market increased by 51 percent and Mac sales by 39 percent, Chief Executive Officer Tim Cook said July 23.

Microsoft, Google Inc. (GOOG), Facebook Inc. (FB) and Apple have been criticized by state media for allegedly cooperating with a U.S. spying program, and Qualcomm Inc. in November disclosed an investigation related to anti-monopoly law.

Earlier, China’s procurement agency told departments to stop buying antivirus software from Symantec Corp. (SYMC) and Kaspersky Lab, while Microsoft Corp. (MSFT) was shut out of a government purchase of energy-efficient computers.

To contact Bloomberg News staff for this story: Steven Yang in Beijing at kyang74@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; John Liu at jliu42@bloomberg.net John Liu

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.